fcribing, as fhall be ordered by a general meeting of the adventurers, from time to time, fhall be paid, on pain of forfeiting the payments formerly made.

The directors fhall be impowered to chufe a treasurer, fecretary, and other officers, to be removeable at the pleasure of a general meeting; but the governor, deputy-governor, or any of the directors, fhall not be chofen into any of these inferior offices.

The bank shall be impowered to lend money upon real or perfonal fecurity, at legal interest.

A general meeting may make by-laws for the good of the company, and inforce them by penalties.

Shares of the bank-stock fhall be tranfferrable only by affignments entered in the bank-books, and figned both by the party alligning and the affignee; which thall make a complete and abfolute right; and no other fhall be good, excepting that shares may be difpofed of by teftament; which fhall be a complete tranfmiffion in favour of the legatee, upon entering in the bank-books fuch part of the teftament as relates to the bank-ftock, without confirmation, or other legal formality.

No dividend fhall be made, fave out of the intereft or product of the joint ftock, and by confent of a general meeting.

For twenty-one years from the date of the act, the bank-flock fhall be free from any public burden to be impofed on money, and the privilege of banking fhall for that ipace be secured to the company exclufively.

Summary execution fhall pass on bills drawn upon, or granted by or to the bank and no fufpenfion shall pass of any charge for any fums lent by or to the bank, but upon confignation.

Bank-ftock fhall be tranfmiffible only to perfons who fhall become partners of the company, or by adjudication or other legal conveyance in favour of a perfon who fhall become a partner, fo as the company's stock may not be diminished or disturbed.

If any of the proprietors fhall be regiftrate at the horn, or fhall commit a crime punishable by forfeiture of his fhare of the bank-ftock, the court of directors may ell fuch fhare by roup to the highest bidcer, after making the previous intimations prescribed by the act for the fale of ankrupts lands, and the price fhall be made forthcoming by the bank to the perVOL. XXIV.

The company fhall not, directly or indirectly, follow any commerce, or trade with the bank-stock, or profits arifing from it, excepting the lending or borrowing money upon intereft, and negotiating bills of exchange.

If the company fhall purchase any heritage belonging to the crown, or fhall lend to the crown any money by way of anticipation upon any part of the ordinary rent or cafualties of the crown, or of any fupply or tax, granted or to be granted, excepting funds upon which a credit of loan thall be granted by parliament; the governor, deputy-governor, directors, or other managers, who fhall agree to or approve of fuch purchase or loan, and each of them, being found guilty thereof according to law, fhall be liable, for every fuch fault, in triple the value of fuch purchase or loan; one fifth of which thall belong to the informer, and the remainder fhall be difpofed of to fuch public ufes as fhall be appointed by parliament.

All foreigners who fhall join as partners of this bank, fhall thereby become naturalized Scotfmen to all intents and purposes.

IN B. The copy of the act from which the preceding abftract is made, is marked to be printed at Edinburgh, by the heirs and fucceffors of Andrew Anderfon, the King's printer, in 1695.

SIR,

Edinburgh, March 27. I Have read the pieces which have ap

peared, from time to time, in your papers, for and against a militia [74.]; but I have read fome of them with regret. Are fome of thofe gentlemen who have, on this fubject, exercifed their pens, and who have difplayed a warm zeal for the honour of their country, actuated by an overheated attachment to a favourite prejudice? or is their keennefs the genuine offspring of true and honeft patriotism? Is it a real advantage they thus anxioufly and paflionately contend for? or is it an imaginary injury that has produced this frenzy? Thefe points I won't prefume to determine. I am apt to believe our efforts are vain; and our neighbours will readily conclude, that our old diftinguifhing feature fill strongly marks our character, and has raifed this ferment. I could with then to fee cool reason subslituted in the place of rancorous zeal, and folid argument in the room of party. fury and mifguided keennels. I could with my

countrymen would look around them, would leave this fallentis femita vite, and turn their eyes to an object more alarming than any grievance that has lately befallen Scotland. Every political obferver knows, the baneful influence of PAPERCREDIT on a trading nation; he fees, with regret, every multiplication of it, and proportionably thereto fixes the date of its inevitable ruin. On the firft eftablishment of banks in this kingdom, many forefaw the bad confequences that would follow, and perhaps they have been already justified; but who can, without grief and indignation, obferve the great increase of thefe inftitutions in this delu ded kingdom? Their pernicious effects will foon appear, nay fome of them we feel already. Is not the price of labour inhanced? Muft not the price of provifions rife, and that of manufactures likewife, and of courfe we be underfold at every foreign market? Have not gold and filver almost entirely difappeared, whilft deluge after deluge of imaginary money is poured down upon us? Are we not at the mercy of thefe bankers, who glut us with vifionary riches, whilft our fpecie is ingroffed and applied to their private emolument? We know what has been the confequence of introducing paper-money into our colonies. Before that period, they had a fufficiency of gold and filver for circulation: but ever fince, thele metals have almoft difappeared, and what remains give a large premium. Does not every day's experience tell us, that the fame evil is preying upon us? for, in every town of Scotland, twenty fhillings of filver, is, with difficulty, fometimes not poflibly, to be had, in exchange for a note of that name; and often we are obliged to put up with difcount. Thele confiderations I offer to the public. I in tend them not as a full lift of the calamities which the unlimited circulation of paper-money will introduce; they are meant only as hints, to awaken the inattention of my countrymen, and roufe them to ftem that torrent of fictitious wealth that threatens to overwhelm us. For this purpole, application fhould be made to parliament, to fupprefs, at least to reduce the number of paper-funds, and to prohibit thefe from ituing beyond a certain fum. I would humbly propofe that a certain c--t--e, now fitting, [54.1, fhould write circular letters to the counties and boroughs of Scotland to inftruct their members to that effect, and I

hope this part of their patriotic effo which I humbly think of greater impo ance to their country than the fche they have now in view, will not prove a ortive.- I am, &c. Edin. Court. SCOTU

A Letter to J— F—, Efq; on conduct of the banks. With remarks a late pamphlet, intitled, Consideratio &c. [39.89.] 2 d. Edinburgh haw

ers.

DEAR SIR,

THE last time I had the pleasure of

ing with you, the converfation tur ed on the measures lately taken by t banks, in confequence of the prefent u usual demand for money.

That happy talent, by which you nev fail to engage every one in company fpeak their thoughts with freedom, ind ced me, then, to exprefs my opini without 'referve; and if I, now, ta upon me to put my fentiments on this i tricate fubject in writing, it is entire owing to a pamphlet lately publishe and reprinted in the Magazine, in whi fome principles are advanced with rega to the conduct of the banks, that seem me very ill founded.

To prevent the impreffion this pa phlet might make on fuch people as are n in the habit of employing their though on these kinds of speculations, I have ve tured to advance fome ideas of mine, the following pages; and as the fubje is more perplexed than entertaining, muft beg the favour of fuch as are n provided with a competent stock of p tience, to fave themfelves the trouble going farther.

Bank-bills can never be received fpecie, but from a perfuafion that the can be exchanged for it on demand.

Therefore, if it fhall ever happen, th a bank fhall make the fmalleft difficult or hesitation, in making payment of t fpecie their bills exprefs, fuch bills may perhaps, be confidered as fecurities, bu not as ready money *.

It is therefore effential to the exiftend of a bank, to be able at all times to an

What happened to the Old Bank thir years ago [xviii. 365.], and even to the Bank England in the year 1745, is no exception this rule. The former confefled their bills be no more than fecurities, and paid intereft d them; the latter was fupported by an univer affociation, to prevent money from going to t rebels.

fwer their bills on demand: but as their profits confit entirely in circulating notes beyond the extent of their fpecie, it follows, that if every body thall have an intereft to turn their bank-bills into ready money, a bank muft carry on a lofing trade.

This I take to be nearly the cafe with the banks of Scotland at prefent, when the vast premiums given for money at London, put fuch as have it to fpare under a strong temptation to fend their money thither.

This, however, is an unforeseen accident; and it is to be hoped will not be of long continuance: but if we could fuppofe it permanent, there can be no doubt, that it would be the intereft of the banks to leave off trade.

The prefent call for money from England, is different from any other extraordinary demand. In the cafe of a fcarcity of corn, it can be computed how much cafh is required to fupply that deficiency, and the banks may provide themselves accordingly but in the prefent cafe, the demand is unlimited, and no provifion the banks can make, can be of use: on the contrary, if they were to find a treafure, fuppole of a million, it would only ferve to increase it; because this demand arifes from a profit on carrying money to London as a commodity, and not as the balance of trade.

If, in the prefent exigency, the banks were only to confult their own particular intereft, they ought to call in all their debts, and bills, and to fufpend their traffick till it could be carried on to advantage. By this ftep they would at once fave themselves, and ferve the public, by depriving it of the means of fending more money to England than it could afford, or could contrive to do without the artificial affiftance of paper-credit: but as fuch a step might occafion a very great convulfion, the meafures the banks have lately taken are to be highly com mended.

By reftricting their cafh-accounts, they leffen their circulation; and by opening books for receiving loans, they, in effect, call in their notes without violence, and obtain a delay in making payment of them, till n oney can be brought in to anfwer them. At the fame time, they ferve, or rather fave their country, by putting it out of the power of individuals to employ the credit of the banks, in draining it of the final remains of specie

yet left: for if banks are of use, by increafing circulation for the purposes of beneficial induftry; they must be deftructive in proportion, if their credit is to be employed in carrying on a lofing trade.

The prudence and expediency of this late conduct of the banks, are fo felf-evi dent, as to require no explanation.- My chief motive for delivering my thoughts on this occafion is, to take notice of fome opinions thrown out in a late pamphlet, intitled, Confiderations on the order of the banks for calling in one fourth of their caf-accounts; in which opinions I have the misfortune to differ from the author.

This pamphlet fets out with fome pofitions, that feem to me not quite confiftent with themselves, and lefs fo with experience." Notes," he fays, "have ferved all the purposes of money; and as a lefs quantity of circulating fpecie became thereby neceflary, the money itself, as a valuable commodity, has been fent to o◄ ther countries, and, in return for it, goods, or the materials of manufactures, brought home.

"The actual fpecie cannot go out of a country, after the establishment of a bank, more than before it, unless it be fent as the value of fomething brought back in return.

"When, upon any occafion, the fpccie itself is neceffarily wanted to be brought back, the ftock which was before purchafed by it, muft always be able to commandit, if a little time is allowed." [40.}

So far is this from being the cafe, that it will be difficult to point out any one article of importation into Scotland, that can bring money back again, the materials for the linen manufacture, and tobacco, excepted: witnefs cloaths, furniture, toys, wine, porter, India goods, battery-ware, horfes of parade, &c. &c.;. and I hope I may be allowed to add, abfentees.

But the chief point aimed at in this pamphlet, is to convince us, that it is the duty of the banks to borrow large fums in England, for the fingle purpose of bringing down the exchange.

Admitting that the method here propo. fed, could be of real benefit to the couns try, I cannot fee with what appearance of juftice it can be required of the banks to facrifice themfelves, even for fo laudable an end; but it feems to me felf-evident, that if the banks had been fo ill inftructed as to have had recourse to this

T 2

expedien

expedient, instead of leffening the evil, they would have augmented it.

The high rate of exchange is a certain proof that the balance is greatly against us, and that more money goes out than comes in but this high exchange is the effect of the demand from England, and not the caufe of it.

If the author of this pamphlet wanted to fend money to London even at the difadvantage of 3 per cent. exchange, can any body imagine he would drop his fcheme, because the banks, by bringing down fpecie, enabled him to get his money remitted 2 per cent. cheaper? On the contrary, if the exchange was 10 per cent. against us; that is, if 100 pounds at London could not be had without paying 110 pounds for it here; it is more than probable, that fuch a high rate of exchange, would put an effectual flop to the prefent flow of money to England, fince that flow arifes chiefly from a view to profit.

This, and indeed every artificial method of lowering exchange, while the cause remains, can only ferve to deceive ourselves; and is as abfurd, as it would be for a man yellow with the jaundice, to think of curing his diftemper by paint ing himself white; or for one worn out with infirmities, to fancy he could recover his health by drinking fpirits.

The pamphlet proceeds, by telling us, that the English make a practice of bring ing down London bills, and felling them here at a very high premium. Surely they could find no body to buy their bills at that difadvantage, unless there was a very great call for money to England; and, as was faid before, the buyers of fuch bills would not be reftrained from fending up their money, if the banks were to furnish them with bills at a cheaper

rate.

The difeafe, then, lies in the difpofition people have to fend up their money, and not in the means of conveying it.

This left argument, or propofition, amounts to neither more nor less than this: The banks ought to borrow and bring down rcc.cco pounds, to hinder a few English dealers from getting 1 or 2 per cent, extraordinary on London bills; - perhaps, too, to give our own dealers the opportunity of getting fomething by tending the money back again.

It is not certain, that the nominal rate of exchange has gone far beyond its natural course even in thres of extremi

ty; for it is equally certain, that the e change between London and Edinbur ought never to exceed 1 per cent. viz. t expence of infurance, and carrying t money up. And, in ftrictness, it does n exceed 1 per cent. at this juncture. we pay 3 per cent. it is because of the di ficulty, or rather impoffibility, of getti fpecie for bank-bills: 3 per cent. is n confidered as the difference between fp cie in London and equal fpecie in Sco land, but as the difference between sp cie at London, and Scots bank-bills; 1 when a banker infifts on 103 pounds Scotland for 100 pounds at London, it because he expects to be paid in ban notes, and confiders fuch notes, from difficulty of converting them into speci as 2 per cent. worse than cafh. This, must be confeffed, is equal to a discou of 2 per cent. on bank-notes.

No doubt, it is the bufinefs of the ban to keep up their credit; and this cann be done while their notes fell at discoun but it is certain, the methods they ha taken are the most likely to produce th effect; and nothing could fo effectual ruin their credit, as to carry on a trad equally pernicious to themfelves and the country, by bringing down fums from En land, to be fent up again as foon as the arrived.

Let us fuppofe the banks to have fo lowed the advice of the pamphlet, and without abridging their calh-accounts, have borrowed 100,000 pounds in Eng land.

The expence of bringing this mone down could not have been less than 1 p cent.; within a few weeks after its arr val, it would neceffarily, when assisted b the cafh-accounts, have found its wa back again, at 1 per cent. exchange. Thus, 2 per cent. at least, must have bee facrificed by this commerce; and th banks would have been liable to the re proach of making themselves the inftru ments of carrying it on; though no earth ly purpofe could have been answered b it, except putting a little money in th pockets of a few remitters, and faving, per cent. to a fet of men employed in fend ing their fortunes out of their native coun try.

1 cannot help being of opinion, that paper-currency ought only to be employ cd in confiderable tranfactions; and a mong the many concurring caufes which may have given occation to the prec kurcity of inoney, the introdering

ramong our low manufacturers, and into all minute payments, by, the circulation of fmall notes, has had no inconfiderable fhare.

The inferior manufacturers, and tradefmen, are to be confidered as the fprings or fountains that fupply us with wealth; they ought always to be kept pure, and fhould never be fuffered to flow with any thing but fpecie. Was that the cafe, we fhould have a conftant refource, on extraordinary occafions; and that refource might be the better depended on, that it would take time, and fome difficulty, to draw money together, when divided among a multitude of people. It is they bring in, and indeed form all our wealth; and, to enable them to preferve it, they ought to remain unacquainted with paper, and all its mysteries. By introducing fmall notes among them, an eafy opportunity is given to remitters to pick up all the fpecie that ought to circulate among them, for the permanent fupport of the nation, and even of the bank, and papercredit.

It is a received maxim, That the circulation of paper, muft ever bear fome proportion to the fpecie in a country to anfwer it. If this maxim is true, nothing can be fo ill judged, as for a bank to employ its paper, to diminish that very fpecie which is the means of its fupport, and on which its own credit depends. It is like cutting off the branch on which one ftands.

Twenty-fhilling notes might be justifiable, when a bank was first introduced, in order to make paper familiar, by accuftoming people, infenfibly, to that fort of circulation. Perhaps, too, our wealth, and means of acquiring it, were at that time fo much inferior to what they are at prefent, that twenty fhillings were as hard to be come at, as five pounds are now. In the prefent flourishing state of our ma nufactures, it is an error to fuffer fuch finall notes to fupply the place of specie: we feel the bad effects of it at this time; and at all times it will fix the exchange againft us; fince it will ever be a profitable trade, to carry out fpecie, where it is not tade ufe of, and is feemingly unneceffary. Thus, by acting as a perpetual drain, it muft, on every extraordinary occafion, expofe us to all the inconveniencies of a total want of cafh.

If no notes were to be ftrack below five pounds, ready money would be required Ar all inferior tranfactions; and could ne

ver be wanting, in a country whose exports exceed five hundred thousand pounds a-year.

No private banker in England circulates notes below ten pounds; and even bank-notes are seldom feen in the country-tranfactions of that kingdom. This keeps cafh in the remote parts of the country; and it is that cash that fupports their paper on every important occasion.

The chief ufe and conveniency of banks arifes from the facility of conveyance, the fecurity against robbery, falfe coinage, and the examining and counting every parti cular filling: to employ bank-bills, where none of thefe advantages are requifite, is the abufe of them, and ought to be reftrained.

I therefore recommend it to our banks to call in all their twenty-fhilling notes, and to iffue none, for the future, below five pounds. The confequence will be, that as foon as a manufacturer fhall amafs five pounds, he will become impatient to get a note for it; he will confider this, in fome refpect, as realifing; and as fuch a fum will appear to be, an object of importance, he will naturally chufe to have the best note for it, and will then learn to diftinguish between one note and another. This will effectually knock all inferior banks on the head; and the Edinburgh banks will then become the fole inftruments of ferving their country, and of restraining the deftructive traffick, of fending money out of it as a commodity; and by being thus ufeful to the public, they will increase their own profits and reputation.

The Confiderations, and this Letter, are both inferted entire.

An impartial effay concerning the nature

and ufe of fpecie and paper-credit in any country; the difficulties which the banks in Scotland at prefent labour under, owing to the fcarcity of fpecie; and what may be done for preventing the diftrefs thereby like to fall upon this country.

1. Specie is an equivalent and mea

fure of commodities and labour. agreed through all trading countries, to fave the inconveniencies of barter.

2. Bank-notes ferve all the purposes of fpecie much better, and are every way as good, fo far as their credit reaches.

3. Specie gives us only the readier ufe of the commodities which we would barter. But,

4. Paper-credit enables us to trade up

от